Is Rental Property Considered a Capital Asset?

Larry Villano, Publisher of Loopholelewy.com

No.

Depreciable property used in your trade or business or used as rental property, even if the property is fully depreciated (or amortized), is not a capital asset.

Real property, such as a building, used in your trade or business or as rental property, even if the property is fully depreciated, is not a capital asset.

Section 197 intangibles are not capital assets either.

The IRS says, capital assets include almost everything you own and use for personal purposes, pleasure, or investment.

Examples of Capital Assets:

  • Stocks, bonds, your coin and stamp collection.
  • Your car and boat
  • Household furnishings
  • Your personal residence

Note: Losses on personal-use property, such as your car, are not deductible. However, should you be lucky enough to sell your car at a gain, the gain is a capital gain and is subject to taxes.

Here's a list of capital assets and noncapital assets..